EXHIBIT 10.2


 


CHANGE OF CONTROL AGREEMENT


 


This Change of Control
Agreement (“Agreement”) is entered into on this         
day of                                 ,
2008 by and between                                                                     
(Name), an individual (the “Officer”), and Magnetek, Inc., a Delaware
corporation (the “Company”).


 


RECITALS


 


WHEREAS, the Board of
Directors of the Company (the “Board”) recognizes that the possibility of a
Change of Control (as hereinafter defined) exists and that the threat or the
occurrence of a Change of Control can result in significant distractions of its
key management personnel because of the uncertainties inherent in such a
situation;


 


WHEREAS, the Board has
determined that it is essential and in the best interest of the Company and its
stockholders to retain the services of the Officer in the event of a threat or
occurrence of a Change of Control and to ensure the Officer’s continued
dedication and efforts in such event without undue concern for personal
financial and employment security; and


 


WHEREAS, in order to
induce the Officer to remain in the employ of the Company, particularly in the
event of a threat or the occurrence of a Change of Control, the Company desires
to enter into this Agreement with the Officer to provide the Officer with
certain benefits in the event his or her employment is terminated as a result
of, or in connection with, a Change of Control.


 


AGREEMENT


 


NOW THEREFORE, in
consideration of the mutual covenants set forth herein, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the parties do
hereby agree as follows:


 


1.             Term of Agreement.  This Agreement
shall commence as of the date hereof and shall continue in effect until                             ,
20    ; provided, however, that on                               ,
20     and on each anniversary thereof, the term of this
Agreement shall automatically be extended for one year unless either the
Company or the Officer shall have given written notice to the other prior
thereto that the term of this Agreement shall not be so extended; provided, further, however, that notwithstanding any such notice by the Company
or the Officer not to extend, the term of this Agreement shall not expire prior
to the second anniversary of a Change of Control Date.  The benefits payable pursuant to Section 2
hereof shall be due in all events if a Change of Control occurs during the term
of this Agreement, and a Change of Control will be deemed to have occurred during
the term hereof if an agreement for a transaction resulting in a Change of
Control is entered into during the term hereof, notwithstanding that the Change
of Control Date occurs after the expiration of the term of this Agreement.


 


 

















 


2.             Benefits Upon Change of Control.


 


(a)           Events Giving Rise to Benefits.  The
Company agrees to pay or cause to be paid to the Officer the benefits specified
in this Section 2 if (i) there is a Change of Control, and (ii) within
the Change of Control Period, (a) the Company or the Successor terminates
the employment of the Officer for any reason other than Cause, death or
Disability or (b) the Officer voluntarily terminates employment for Good
Reason.


 


(b)           Benefits Upon Termination of
Employment.  If the Officer is entitled to benefits pursuant to
this Section 2, the Company agrees to pay or provide to the Officer as
severance payment, the following:


 


(i)            A single lump sum payment, payable
in cash within five days of the Termination Date (or if later, the Change of
Control Date), equal to the sum of:


 


(A)          the accrued portion of any of the
Officer’s unpaid base salary and vacation through the Termination Date and any
unpaid portion of the Officer’s bonus for the prior fiscal year; plus


 


(B)           a portion of the Officer’s bonus for the
fiscal year in progress, prorated based upon the number of days elapsed since
the commencement of the fiscal year and calculated assuming that 100% of the
target under the bonus plan is achieved; plus


 


(C)           an amount equal to
the Officer’s Base Compensation times the Compensation Multiplier.


 


(ii)           Continuation, on
the same basis as if the Officer continued to be employed by the Company, of
Benefits for the Benefit Period commencing on the Termination Date.  The Company’s obligation hereunder with
respect to the foregoing Benefits shall be limited to the extent that the
Officer obtains any such benefits pursuant to a subsequent employer’s benefit
plans, in which case the Company may reduce the coverage of any Benefits it is
required to provide the Officer hereunder as long as the aggregate coverage and
benefits of the combined benefit plans is no less favorable to the Officer than
the Benefits required to be provided hereunder.


 


(iii)          Outplacement
services to be provided by an outplacement organization of national repute,
which shall include the provision of office space and equipment (including
telephone and personal computer) but in no event shall the Company be required
to provide such services for a value exceeding 17% of the Officer’s Base
Compensation.


 


(iv)          Accelerated vesting
of all outstanding stock options and of all previously granted restricted stock
awards.


 


(c)           Notwithstanding
anything to the contrary in this Agreement, if the Company determines (i) that
on the date the Executive’s employment with the Company terminates, or at such
other time that the Company determines to be relevant, the Executive is a “specified
employee” (as such term is defined under Section 409A of the Code) of the
Company and (b) that any payments to be provided to the Executive pursuant
to this Agreement are or may become subject to the additional tax under Section 409A(a)(1)(B) of
the Code or any other taxes or penalties imposed under Section 409A of the
Code (“Section 409A Taxes”) if provided at the 


 


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time otherwise required under this Agreement, then such payments shall
be delayed until the date that is six months after date of the Executive’s “separation
from service” (as such term is defined under Section 409A of the Code)
with the Company, or such shorter period that, as determined by the Company, is
sufficient to avoid the imposition of Section 409A Taxes.  The provisions of this Section 2(c) shall
only apply to the minimum extent required to avoid the Executive’s incurrence
of any Section 409A Taxes.


 


3.             Definitions.  When
used in this Agreement, the following terms have the meanings set forth below:


 


“Base Compensation” means the sum of (i) the Officer’s
annual salary in effect on the earlier of the Change of Control Date and the
Termination Date and (ii) 100% of the target under the bonus plan for the
fiscal year during which the Change of Control Date occurs.


 


“Benefits” means benefits that would be available under any
health and welfare plan of the Company on the Termination Date.


 


“Benefit Period” means 18 months.


 


“Cause” means:  (A) conviction of a felony or
misdemeanor involving moral turpitude, or (B) willful gross neglect or
willful gross misconduct in carrying out the Officer’s duties, resulting in
material economic harm to the Company or any Successor.


 


“Change of Control” means (i) any event described in Section 13.2
of the 2004 Stock Incentive Plan of the Company or any event so defined in any
stock incentive or similar plan adopted by the Company in the future unless, in
either case, such event occurs in connection with a Distress Sale and (ii) any
event which results in the Board ceasing to have at least a majority of its
members be “continuing directors.”  For
this purpose, a “continuing director” means a director of the Company who held
such position on September 29, 2005 or who thereafter was appointed or
nominated to the Board by a majority of continuing directors.


 


“Change of Control Date” means the date on which a Change of
Control is consummated.


 


“Change of Control
Period” means the period commencing on the earlier of (i) 180 days
prior to the Change of Control Date and (ii) the announcement of a
transaction expected to result in a Change of Control, and ending on the second
anniversary of the Change of Control Date.


 


“Code” means the
Internal Revenue Code of 1986, as amended. 
References herein to a specific section of the Code shall be deemed to
include comparable or analogous provisions of state, local and foreign law.


 


“Compensation Multiplier” means 1.5.


 


“Disability” means the inability of the Officer due to illness
(mental or physical), accident, or otherwise, to perform his or her duties for
any period of 180 consecutive days, as determined by a qualified physician.


 


“Distress Sale”
means a Change of Control occurring within 18 months of any of the
following:  (i) the Company’s
independent public accountants shall have made a “going concern” qualification
in their audit report (other than by reason of extraordinary occurrences, 


 


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such as material
litigation, not attributable to poor management practices); (ii) the
Company shall lack sufficient capital for its operations by reason of
termination of its existing credit lines or the Company’s inability to secure
credit facilities upon acceptable terms; or (iii) the Company shall have
voluntarily sought relief under, consented to or acquiesced in the benefit of
application to it of the Bankruptcy Code of the United States of America or any
other liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments or similar
laws, or shall have been the subject of proceedings under such laws (unless the
applicable involuntary petition is dismissed within 60 days after its filing).


 


“Good
Reason” means (A) without the Officer’s prior written consent,
assignment to the Officer of duties materially inconsistent in any respect with
his or her position immediately prior to the Change of Control Date or any
other action by a Successor that results in a material diminution in the
Officer’s position, authority, duties, responsibilities, annual base salary or
target bonus when compared with the same immediately prior to the Change of
Control Date; or (B) assignment of the Officer, without his or her prior
written consent, to a place of business that is not within the metropolitan
area of the Officer’s current place of business.


 


“Stay
and Pay Agreement” means a “stay and pay” or retention agreement entered
into in contemplation of a sale by the Company of a division or business unit.


 


“Successor”
means any acquiror of all or substantially all of the stock, assets or business
of the Company.


 


“Termination
Date” means the last day of the Officer’s employment.


 


4.             Eligibility;
Effect on Other Agreements and Plans.


 


(a)           In
the event the Officer is also a party to a Stay and Pay Agreement or severance
agreement and becomes entitled to any payment thereunder, this Agreement shall
be null and void and the Officer shall not be entitled to any payment or
benefit hereunder.  Nothing in this
Agreement shall prevent or limit the Officer’s continuing or future
participation in any benefit, bonus, incentive or other plan or program
provided by the Company and for which the Officer may qualify, nor shall
anything herein limit or reduce such rights as the Officer may have under any
other agreements with the Company. 
Amounts that are vested benefits or that the Officer is otherwise
entitled to receive under any plan or program of the Company shall be payable
in accordance with such plan or program, except as explicitly modified by this
Agreement.


 


(b)           Plan
Amendments.  The Company shall adopt such amendments to its
employee benefit plans and insurance policies, including, without limitation,
the Plans, as are necessary to effectuate the provisions of this
Agreement.  If and to the extent any
benefits under Section 2 are not paid or payable or otherwise provided to
the Officer or his or her dependents or beneficiaries under any such plan or
policy (whether due to the terms of the plan or policy, the termination
thereof, applicable law, or otherwise), then the Company itself shall pay or
provide for such benefits (including any gross-up needed to account for the
less favorable tax treatment if the payments are made from the Company and not
from the Plans or other employee benefit plans).


 


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5.             Golden
Parachute Tax.


 


(a)           In the event that the Value (as
hereinafter defined) attributable to the payments and benefits provided in Section 2
above (“Agreement Payments”), in combination with the Value attributable to
other payments or benefits in the nature of compensation to or for the benefit
of the Executive (including but not limited to the value attributable to
accelerated vesting of options or other equity or non-equity incentive
compensation awards and, collectively with Agreement Payments, “Payments”),
would constitute an “excess parachute payment” (within the meaning of Section 280G
of the Code) such that the excise tax of Section 4999 of the Code (the “Excise
Tax”) is imposed on the Executive, the Company shall provide to the Executive
(either directly or through payment of taxes via required withholding), in
cash, an additional payment (the “Gross-up Payment”) such that the net amount
retained by the Executive from the Payments and the Gross-up Payment, after
reduction for any Excise Tax upon the Payments and any federal, state and local
income and employment taxes and Excise Tax on the Gross-up Payment, and any
interest, penalties or additions to tax payable by Executive with respect
thereto, shall be equal to the Payments at the time such Payments are to be
made.  Any Gross-Up Payment or other
payment payable under this Section 5 shall be paid to the Executive
promptly and in no event later than the end of the calendar year next following
the calendar year in which the related tax is paid by the Executive.


 


                (b)           For purposes of this Section 5,
the Company and the Executive hereby irrevocably appoint the persons who
constituted the Compensation Committee of the Board immediately prior to a
Change of Control, or a three person panel named by a majority of them, as
arbitrators (the “Arbitrators”) to make all determinations required under this Section 5,
including but not limited to the Value of all Payments (and the components
thereof).  For purposes of this Section 5,
“Value” shall mean value as determined by the Arbitrators applying the
valuation procedures and methodologies established pursuant to the Code section
or sections applicable to “excess parachute payments,” including any
interpretive guidance (whether or not binding) as the Arbitrators determine
appropriate.  The determinations of the
Arbitrators shall be final and binding on both the Company and the Executive,
and their successors, assignees, heirs and beneficiaries, for purposes of
determining the amount payable under this Section 5.  All fees and expenses of the Arbitrators
(including attorneys’ and accountants’ fees) shall be borne by the
Company.  The arbitrators will be
compensated, to the extent they are not then members of the Board’s
Compensation Committee, at the rates at which they would have been compensated
for their work as Committee members in effect immediately prior to the Change
of Control Date.”


 


6.             Employment
At-Will.  Notwithstanding anything to the contrary contained
herein, the Officer’s employment with the Company is not for any specified term
and may be terminated by the Officer or by the Company at any time, for any
reason, with or without cause, without liability except with respect to the
payments provided hereunder or as required by law or any other contract or
employee benefit plan.


 


7.             General.


 


(a)           Entire Agreement.  This
document constitutes the final, complete, and exclusive embodiment of the
entire agreement and understanding between the parties related to the subject
matter hereof and supersedes and preempts any prior or contemporaneous
understandings, agreements, or representations by or between the parties,
written or oral.


 


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(b)           Successors and Assigns.  This
Agreement is intended to bind and inure to the benefit of and be enforceable by
the Officer and the Company, and their respective successors and assigns,
except that the Officer may not assign any of his or her duties hereunder and
he or she may not assign any of his or her rights hereunder without the prior
written consent of the Company.


 


(c)           Amendments.  No
amendments or other modifications to this Agreement may be made except by a
writing signed by both parties.  No
amendment or waiver of this Agreement requires the consent of any individual,
partnership, corporation or other entity not a party to this Agreement.  Nothing in this Agreement, express or
implied, is intended to confer upon any third person any rights or remedies
under or by reason of this Agreement.


 


(d)           No Amounts Due.  The
Officer acknowledges that no payments or benefits whatsoever shall become due
hereunder in the absence of a Change of Control.


 


(e)           No Mitigation Obligation.  The
parties hereto expressly agree that the payment of the benefits by the Company
to the Officer in accordance with the terms of this Agreement will be
liquidated damages, and that the Officer shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Officer hereunder or otherwise except
as expressly provided in Sections 2(b)(ii) and 4(a).


 


(f)            Changes to Benefits.  In
the event that, within 90 days of the execution of this Agreement, the Company
enters into an agreement for a Change of Control in connection with a merger to
be accounted for as a “pooling of interests,” the Board will be entitled to
modify or reduce the payments or benefits due hereunder, or to abrogate this
Agreement entirely, if and to the extent that Ernst & Young opines to
the Board such measures are necessary in order to ensure that the proposed
merger will be accounted for as a “pooling of interests.”  The Board will have no such authority after
such 90-day period and, in the event such merger does not eventuate or is
ultimately not accounted for as a “pooling of interests,” this Agreement, with
or without any action by the Board or the Officer, shall be automatically
reinstated.


 


(g)           Choice of Law.  All
questions concerning the construction, validity and interpretation of this
Agreement will be governed by the laws of the State of Delaware without giving
effect to principles of conflicts of law.


 


(h)           ERISA.  This
Agreement is pursuant to the Company’s severance plan for Officers (the “Plan”)
which is unfunded and maintained by the Company primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees.  The Plan
constitutes an employee welfare benefit plan (“Welfare Plan”) within the
meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”).  Any
payments pursuant to this Agreement which could cause the Plan not to
constitute a Welfare Plan shall be deemed instead to be made pursuant to a
separate “employee pension benefit plan” within the meaning of Section 3(2) of
ERISA as to which the applicable portions of the document constituting the Plan
shall be deemed to be incorporated by reference.  None of the benefits hereunder may be assigned
in any way.


 


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(i)            Representation.  The
Officer acknowledges that neither the Company’s counsel nor its outside counsel
law firms have represented the Officer in connection with this Agreement and
that he or she has had the opportunity to consult with counsel before executing
this Agreement.


 


(j)            Mutual Non-Disparagement.  The
Company and subsidiaries agree, and the Company shall use its best efforts to
cause its respective officers and directors to agree, that they will not make
or publish any statement critical of the Officer, or in any way adversely
affecting or otherwise maligning the Officer’s reputation.  The Officer agrees that he or she will not
make or publish any statement critical of the Company, its affiliates and their
respective officers and directors, or in any way adversely affecting or
otherwise maligning the business or reputation of the Company, its affiliates
and subsidiaries and their respective officers, directors and employees.


 


(k)           Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be considered an original, and all of which shall be deemed one and the
same instrument.


 


(l)            Severability.          If any part of this Agreement shall
for any reason be found or held invalid or unenforceable by any court or
governmental agency of competent jurisdiction, such invalidity or
unenforceability shall not affect the remainder of this Agreement, which shall
survive and be construed as if such invalid or unenforceable part was not
included in this Agreement.


 


8.             Arbitration.


 


(a)           Except as provided in Section 5
hereof, any disputes or claims arising out of or concerning the Officer’s
employment or termination by the Company, whether arising under theories of
liability or damages based upon contract, tort or statute, will be determined
exclusively by arbitration before a single arbitrator in accordance with the
employment arbitration rules of the American Arbitration Association,
except as modified by this Agreement. 
The arbitrator’s decision will be final and binding on both
parties.  Judgment upon the award
rendered by the arbitrator may be entered in any court of competent
jurisdiction.  In recognition of the fact
that resolution of any disputes or claims in the courts is rarely timely or
cost effective for either party, the Company and the Officer enter this mutual
agreement to arbitrate in order to gain the benefits of a speedy, impartial and
cost-effective dispute resolution procedure. 
The parties further intend that the arbitration hereunder be conducted
in as confidential a manner as is practicable under the circumstances, and
intend for the award to be confidential unless that confidentiality would
frustrate the purpose of the arbitration or render the remedy awarded
ineffective.


 


(b)           Any arbitration will be held in
Menomonee Falls, Wisconsin.  The
arbitrator must be an attorney with substantial experience in employment
matters, selected by the parties alternately striking names from a list of five
such persons provided by the American Arbitration Association (AAA) office
located nearest to the place of employment, following a request by the party
seeking arbitration for a list of five such attorneys with substantial
professional experience in employment matters. 
If either party fails to strike names from the list, the arbitrator will
be selected from the list by the other party.


 


(c)           Each party will have the right to
take the deposition of one individual and any expert witness designated by the
other party.  Each party will also have
the right to propound requests for production of documents to any party and the
right to subpoena documents and witnesses for the arbitration.  Additional discovery may be made only where
the arbitrator 


 


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selected so orders upon a showing of substantial
need.  The arbitrator will have the
authority to entertain a motion to dismiss and/or a motion for summary judgment
by any party and will apply the standards governing such motions under the
Federal Rules of Civil Procedure.


 


(d)           The Company and the Officer agree
that they will attempt, and they intend that they and the arbitrator should use
their best efforts in that attempt, to conclude the arbitration proceeding and
have a final decision from the arbitrator within 120 days from the date of
selection of the arbitrator; provided, however,
that the arbitrator will be entitled to extend such 120-day period for one
additional 120-day period.  The
arbitrator will deliver a written award with respect to the dispute to each of
the parties, who must promptly act in accordance therewith.


 


(e)           The Company will pay any and all
reasonable fees and expenses incurred by the Officer in seeking to obtain or
enforce any rights or benefits provided by this Agreement, including all
reasonable attorneys’ and experts’ fees and expenses, accountants’ fees and
expenses, and court costs (if any) that may be incurred by the Officer in
pursuing a claim for payment of compensation or benefits or other right or
entitlement under this Agreement, provided that
the Officer is successful as to material issues, resulting in an award of at
least $50,000.  In addition, the Company
will pay without regard to the results of the arbitration all costs and fees
not normally associated with a civil proceeding, such as any fees charged by
the arbitrator or any room rental charges.


 


(f)            In a contractual claim under this
Agreement, the arbitrator must act in accordance with the terms and provisions
of this Agreement and applicable legal principles and will have no authority to
add, delete or modify any term or provision of this Agreement.  In addition, the arbitrator will have no
authority to award punitive damages under any circumstances unless repudiating
the arbitrator’s authority to do so would cause this arbitration clause to be
ruled ineffective under applicable law.


 


IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date it is last executed below by either party.


 


	
   

  	
   

  
	
   

  	
  [Officer Name]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAGNETEK, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


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